Deadline completion penalty for contractors

[Stephen R.]

I'm wondering what kind of monetary penalty would be reasonable for a contractor who does not complete a project within the agreed upon timeline. 

I had one contractor tell me he would never agree to a contract that included a penalty and I told him to go pound sand just because I didn't like his attitude, even though I haven't used them in the past. However, I recently had a friend have a 4 month project take over 11 months on a contract that didn't include a penalty. To avoid that nightmare I am definitely going to include one going forward. 

I'm using J Scott's Independent Contractors Agreement and SOW from the BP file place and he includes a $200/week penalty to cover his costs during any delay. The interest alone on my hard money is $500/week. Would that be an unreasonable amount? The agreed upon deadline is 7/21 and I wrote in the penalty beginning 7/28.